{"id":7965,"date":"2019-10-31T09:34:51","date_gmt":"2019-10-31T16:34:51","guid":{"rendered":"https:\/\/blog-prod.qad.com\/blog\/?p=7965"},"modified":"2019-10-31T09:34:51","modified_gmt":"2019-10-31T16:34:51","slug":"why-manufacturers-need-an-outcome-culture-pt2","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2019\/10\/why-manufacturers-need-an-outcome-culture-pt2","title":{"rendered":"Why Manufacturers Need an Outcome Culture (Pt. II)"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;7978&#8243; img_size=&#8221;full&#8221;][vc_column_text]<i><span style=\"font-weight: 400;\">In \u201c<\/span><\/i><a href=\"https:\/\/www.qad.com\/blog\/2019\/10\/why-manufacturers-need-an-outcome-culture-pt1\/\"><i><span style=\"font-weight: 400;\">Why Manufacturers Need an Outcome Culture (Pt. I)<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">,\u201d we made the case for manufacturers adopting an outcome culture. In Part II, we will cover how to build and maintain an outcome culture.<\/span><\/i><\/p>\n<h2><span style=\"font-weight: 400;\">Implementing an Outcome Culture<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An outcome culture emphasizes clarity on what to achieve at each stage of business activity. The focus is on the <\/span><a href=\"https:\/\/www.qad.com\/blog\/2015\/12\/why-you-should-care-about-outcomes-if-you-dont-already\/\"><span style=\"font-weight: 400;\">outcome<\/span><\/a><span style=\"font-weight: 400;\"> rather than the process. Of course, manufacturers still need processes. But management and staff focus on whether they achieve a series of outcomes. They don\u2019t make adherence to a set of processes the primary management tool.\u00a0\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Building an Outcome Framework<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An outcome culture needs a simple framework.\u00a0 Each person should be clear on the outcome to which they contribute. And we want to turn the complexity of scores of processes into a handful of outcomes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s consider the elements of an Outcome Framework.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Start with Execution Outcomes<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">We begin by grouping a series of processes. We then identify the outcome that group of processes should enable. We call the outcome produced by the group of processes an Execution Outcome.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s illustrate. Here\u2019s one group of processes a make-to-stock manufacturer might go through:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider the latest forecast<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider current stock levels<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider safety stock levels\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Confirm current safety stock policy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Confirm lead time for required raw materials\/components<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consider capacity constraints affecting consumption of raw materials\/components<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Create time-phased purchase orders<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The Execution Outcome for this group of processes is \u2018Purchasing Plan Created\u2019. The people involved are clear about the outcome they\u2019re responsible for, and they know that without an effective purchasing plan, a manufacturer can\u2019t make and deliver what the customers want, when they want it. There\u2019s a clear sense of purpose in what they do.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Link the Execution Outcomes to Form an Outcome Cycle<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A manufacturer will define an Execution Outcome for each group of processes. You can then link each of the Execution Outcomes. We call these linked Execution Outcomes an Outcome Cycle. An Outcome Cycle will have 8-12 linked Execution Outcomes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s what that would look like:<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=&#8221;7966&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<span style=\"font-weight: 400;\">Here\u2019s an example of an Outcome Cycle for a make-to-stock manufacturer:<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=&#8221;7967&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h2><span style=\"font-weight: 400;\">Identify Contributing Outcomes to Support the Outcome Cycle<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To keep the Outcome Cycle simple, manufacturers may include an Execution Outcome that covers many processes. In that case, staff may not feel a close connection to the Execution Outcome they serve. Adding a layer of outcomes below the Execution Outcome can help. We call this next-down layer Contributing Outcomes. Each contributes to the Execution Outcome.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To continue our make-to-stock example, a manufacturer might consider that \u2018Production Plan Executed\u2019 covers too many processes. Rather than adding more Execution Outcomes, we can break the \u2018Production Plan Executed\u2019 into Contributing Outcomes. It could look like this:<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_single_image image=&#8221;7968&#8243; img_size=&#8221;full&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\n<h2><span style=\"font-weight: 400;\">Analyze and Develop Execution Capability<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">For a manufacturer to execute their strategy, they need execution capability. An Outcome Cycle provides a simple framework for analyzing then developing execution capability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Execution capability requires four elements:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Processes<\/b><span style=\"font-weight: 400;\"> \u2013 the steps you typically want staff to follow.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Systems<\/b><span style=\"font-weight: 400;\"> \u2013 IT and other systems to enable the processes.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>People Skills<\/b><span style=\"font-weight: 400;\"> \u2013 people with the knowledge, skills and motivation to achieve their Execution Outcome.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Partners<\/b><span style=\"font-weight: 400;\"> \u2013 external partners play a role for most manufacturers in execution and must be integrated.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">For each Execution Outcome, a manufacturer must have all four elements effectively in place.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Creating an Outcome Culture<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">It\u2019s one thing to define an Outcome Cycle and develop the necessary execution capability. It\u2019s another to turn this into a culture \u2013 into \u2018the way we do things around here\u2019. Let\u2019s consider the elements that will help create an outcome culture.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Measure and Manage Outcomes<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Each Execution Outcome must have at least one KPI. And that must become the key thing management focuses on. The adage of \u2018what gets measured gets managed\u2019 remains true. If people at lower levels understand the top management focus on Execution Outcome KPIs, then that\u2019s what they\u2019ll focus on.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Reinforce Outcomes with Rewards<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Reinforcing the measurement element, we want elements of reward linked to the Execution Outcomes. That will reiterate the message about the importance of outcomes.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Recognition of Outcomes<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When <\/span><a href=\"https:\/\/www.hrdive.com\/news\/how-recognition-and-engagement-work-in-tandem\/542773\/\"><span style=\"font-weight: 400;\">recognition of staff achievements<\/span><\/a><span style=\"font-weight: 400;\"> occurs, it should be formulated and presented in outcome terms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, \u2018Jill recognized a problem with safety stock that no one had seen before. She knew it would mean we couldn\u2019t deliver a practical purchasing plan for production. So, she took the initiative and fixed the safety stock issue. As a result, we were able to deliver a viable purchasing plan.\u2019<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Outcome Framework<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To achieve an outcome culture, a manufacturer needs an Outcome Framework. A framework helps staff understand and focus on the outcome to which they contribute. And it simplifies the task of building execution capability. An Outcome Framework includes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An Execution Outcome for each group of processes<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">An Outcome Cycle that links each of the Execution Outcomes<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The breakdown of Execution Outcomes into Contributing Outcomes as needed<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The four elements of execution capability \u2013 processes, systems, people skills and partners<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">A plan for reinforcing the importance of the outcome approach<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Creating a New Culture Takes Evolution, Not Revolution<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">We discussed the benefits of an outcome culture in the last article. These include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Improved problem-solving\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Customer responsiveness\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Innovation\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ability to change\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Less administration and overhead\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Positive employee experience<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These benefits of a positive, high-performance culture don\u2019t happen overnight. Creating a new <\/span><a href=\"https:\/\/www.forbes.com\/sites\/alankohll\/2018\/08\/14\/how-to-build-a-positive-company-culture\/\"><span style=\"font-weight: 400;\">positive company culture<\/span><\/a><span style=\"font-weight: 400;\"> takes time, patience and perseverance. But the rewards make it worthwhile for everyone in the company.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;7978&#8243; img_size=&#8221;full&#8221;][vc_column_text]In \u201cWhy Manufacturers Need an Outcome Culture (Pt. I),\u201d we made the case for manufacturers adopting an outcome culture. In Part II, we will cover how to build and maintain an outcome culture. Implementing an Outcome Culture An outcome culture emphasizes clarity on what to achieve at each stage of business activity. The [&hellip;]<\/p>\n","protected":false},"author":87,"featured_media":7978,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[490,13,955,956,859,975,245,951,974,115],"class_list":["post-7965","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","tag-change","tag-culture","tag-customer-responsiveness","tag-employee-experience","tag-execution-capability","tag-execution-outcome","tag-innovation","tag-outcome-culture","tag-outcome-framework","tag-outcomes"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why Manufacturers Need an Outcome Culture (Pt. 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Before founding Outcome Leaders, he led the Asia Pacific region of QAD Inc. He\u2019s also written two books, both on outcomes. Today, Paul helps technology vendors create passionate customers by enabling the customers\u2019 business outcomes.\",\"url\":\"https:\\\/\\\/www.qad.com\\\/blog\\\/author\\\/paul-henderson\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Why Manufacturers Need an Outcome Culture (Pt. II) | QAD Blog","description":"Learn how to build and maintain a positive outcome-based culture in a manufacturing organizational structure to improve business outcomes.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.qad.com\/blog\/2019\/10\/why-manufacturers-need-an-outcome-culture-pt2","og_locale":"en_US","og_type":"article","og_title":"Why Manufacturers Need an Outcome Culture (Pt. 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